IBM Q1 Profit Down, But Tops View

(RTTNews) - International Business Machines Corp. (IBM) Monday reported a drop in profit for the first quarter, as revenues continued to decline, hurt largely by sharp drop in hardware sales and strong US dollar. Nevertheless, the company's quarterly earnings trumped Wall Street estimates as did revenues.

Armonk, New York-based IBM's first-quarter profit dropped to $2.02 billion or $2.09 per share from $2.42 billion or $2.36 per share last year.

Excluding one-time items, earnings from continuing operations fell to $2.35 per share from $2.91 per share last year. Analysts had a consensus earnings estimate of $2.09 per share for the quarter.

IBM's first-quarter revenues declined 5 percent to $18.68 billion from $19.59 billion last year. This marks the 16th straight quarter the company has reported lower revenues. Analysts polled by Thomson Reuters expected revenues of $18.28 billion for the quarter.

IBM is divesting off its low-margin and unprofitable hardware businesses to improve profitability. The company is now striving hard to make IBM a company that provides cloud computing and data analytics.

Cognitive solutions revenues dropped 1.7 percent to $3.98 billion, while global business services declined to 4.3 percent to $4.25 billion. Technology services and cloud platforms declined 1.5 percent to $8.59 billion, while systems revenues dropped 21.8 percent to $1.89 billion.

IBM said it announced or closed 10 acquisitions during the quarter. Earlier in April, IBM had closed its $2.6 billion acquisition of Truven Health Analytics.

Looking ahead, IBM continues to expect full-year 2016 adjusted earnings of at least $13.50 per share. Analysts currently estimate earnings of $13.54 per share.

IBM closed Monday's trading at $152.53, up $0.81 or 0.53%, on the NYSE. The stock further dropped $2.22 or 1.46% in the after-hours trade.